New bill tries to limit abusive patent demand letters

A new bill aimed at limiting the number of abusive patent demand letters was scheduled to be discussed by a House of Representatives subcommittee on July 10.

The Subcommittee on Commerce, Manufacturing and Trade was to consider the “Targeting Rogue and Opaque Letters Act” (H.R. 4450), also known as the TROL Act, and possibly forward it for further consideration in the House.

U.S. Rep. Lee Terry (R-NE), the subcommittee’s chairman, released a draft of the legislation, which attempts to protect businesses from abusive patent assertion entities (PAEs), better known as patent trolls, according to a subcommittee document. The proposal also tries to balance the needs of patent holders to “legitimately protect their intellectual property.”

“We have spent months examining different ideas and challenges to address the growing threat of patent trolls, and the text we will consider this week is a product of those discussions amongst members and stakeholders,” Terry said in a statement. “We all share the common goal of protecting businesses from abusive and deceptive practices while preserving American innovation.”

There are several coalitions and organizations that support the proposals. For instance, the Coalition for 21st Century Patent Reform said in a statement that the sending of false and deceptive patent demand letters has “no place in a well-functioning patent system.”

“Legislation targeting abusive demand letters is urgently needed and will address one of the most pressing problems that currently exists in connection with patent enforcement practices,” the coalition said.

“The Targeting Rogue and Opaque Letters Act of 2014 (TROL Act) is a welcome step in that direction,” the coalition added. Still, it wants the bill to have a clearer definition of “bad faith” to “make it more effective in targeting bad behavior while safeguarding legitimate patent licensing and enforcement communications.”

The coalition includes such companies as 3M, Caterpillar, General Electric, Johnson & Johnson, Eli Lilly and Procter & Gamble.

In addition, the American Intellectual Property Law Association (AIPLA), made up of patent lawyers and related professionals, said it supports the proposal as well.

“The approach in the draft bill is consistent with AIPLA’s position that a number of the most troubling and visible abusive practices driving some of the current patent reform debate may be appropriately dealt with under the laws governing consumer fraud and deceptive trade practices,” Wayne P. Sobon, AIPLA’s president, said in a letter to the subcommittee.

“Any action in this area needs to strike a balance between addressing the fraudulent activity while not inhibiting free speech or legitimate patent licensing and enforcement. AIPLA believes the approach of this draft bill moves significantly towards such a balance,” he added.

The Innovation Alliance also supports the proposal, with Executive Director Brian Pomper saying in a statement, “the Act appropriately targets abusive behavior rather than particular types of patent owners, while maintaining the integrity of legitimate patent enforcement practices for all patent holders.”

“The TROL Act targets a real problem while avoiding an overly broad approach that would impair the necessary and beneficial economic functions of the patent system,” he added.

If enacted, the bill will let the Federal Trade Commission and Attorneys General from all 50 states charge patent trolls who send out misleading, deceptive letters, according to a report from The Hill.

The proposal follows the failure – at least for now – to enact a broader patent reform proposal in the U.S. Senate, InsideCounselreported.